Whether the European single currency survives its existential crisis (and the betting on that must be yes, more or less), the larger project of bringing the continent closer together has been fatally damaged.

That much was admitted by the European Central Bank last month in a bulletin titled Indicators of Market Segmentation, which found that lending across borders within the eurozone has fallen from 60% of money-market flows last summer to 40% this February. Foreigners held about 45% of all Spanish government debt in 2009; now the figure is closer to 30%. What was one continent – at least in financial terms and for over a decade at that – is swiftly coming apart.

But the Great Break-Up goes further and deeper than that: not only are European nations coming unstuck from each other, they are also breaking into regions. Clear evidence is visible in Spain this week, with Andalucía becoming the fourth province in the country to ask Madrid for a cash rescue, after Valencia, Murcia and Catalonia. In part, this is about regions unable to bear the fiscal discipline that northern Europe has imposed on Madrid and that prime minister Mariano Rajoy is now trying to whip 17 semi-autonomous regional governments into following. There is political capital for Andalucía's José Antonio Griñán – president of Spain's only Socialist region – in opposing Mr Rajoy's cuts, which is why he is challenging the federal budget in court.

But Madrid knows that if it resists the appeals for emergency funds then any disruption or closure of schools and hospitals (which are under control of the regions) will be blamed squarely on the capital. Hence the swift response from Mr Rajoy to set up an €18bn emergency pot to pay out to stricken regions. The prime minister's liabilities are unlikely to stop there – not with Spain's recession deepening and cutting tax revenues. The big risk for Mr Rajoy is therefore that he will not be able to deliver the austerity he has promised northern Europe, and will see his budget projections blown out of the water – even while his voters blame him for imposing unnecessary economic pain.

Just like Italy, Spain is now paying the price for not using the long boom to build sustainable economies in its poorer regions. But it is not alone in that vice; Britain did the same, and it is very likely that Westminster faces more conflict with councils in the north and national governments in Scotland and Wales.